he customer decision-making process has always been an intriguing puzzle to solve across the whole of retail. No matter the type of retail segment you are in, what’s inside your customers’ minds right before they decide (or not) to purchase something has many times left you either with a glimpse of understanding or not having a clue what just happened but it worked (or didn’t).
The truth is, customers many times don’t know either.
They usually give you some kind of reason or answer but, in reality, 90–95% of purchase decisions happen subconsciously (Gerald Zaltman, 2003, Harvard Business Review Press).
This is where it gets tricky. How do you communicate with somebody’s subconsciousness? And more importantly, how do you sell to a subconscious mind? Is it even possible to identify what drives subconscious buying decisions? Well, in general, it very much is. And it’s no rocket science that would cost you a lot of time or resources.
Picture the following scenario: you enter a store and see an amazing and functional piece of clothing. You try it on and end up loving it. The piece costs 80 Euros and as you’re about to pay, the employee goes:
“Look, I shouldn’t be telling you this but in our other store just 15 minutes away from here you can get this exact piece but with a 50 Euro discount, so instead of 80 you would only pay 30.”
This is a no-brainer for you, so you hop in your car and go purchase it there. Easy, right? But imagine the following scenario: you’re now buying a car and you’ve chosen one, which costs 25.000 Euros. You’re about to make a deal when the salesperson goes:
“Look, I shouldn’t be telling you this but we have another showroom just a 15-minute drive from here and there you can get the same car with a 50 Euro discount, so instead of paying 25.000 you only pay 24.950.”
Well, this offer doesn’t sound as appealing as the first one, even though we are discussing the same 50 Euro discount. It is the same 50 Euros you had to earn by working the same amount of time but somehow it feels different. Why? Because the context changed. If we were completely rational, the context shouldn’t matter but we know that we are quite irrational creatures and so things like the context play a huge role in our decision-making.
The first example of why context matters was easy to understand because even though it was irrational, you felt like you made a conscious decision to either save the 50 Euros or not.
Let’s now dive more into what we perceive as the subconscious mind with a simple study done at one random coffee shop. This coffee shop had three different coffee cup sizes: small, medium, and large. Which of the three sizes was the most popular?
The medium size. It just sits right in the middle and is generally a safe choice for most people. But what do you think happens if the coffee shop removes the small size from their offering and they add a super size? The original medium size will now be presented as the small size and the original large size as the new medium size. Which of the three sizes will be the most popular now?
Yep, the new medium size, which used to be a large back in the day. Does the fact that people suddenly prefer a completely different size make sense? No. Does it work like this because we care more about context than actual sizes? Absolutely!
As a retailer, context is your superweapon. Changing it is often very simple and costs you less than redesigning the product or changing the price. It’s flexible enough to experiment with and find out what appeals to your customers’ subconscious minds the most. Let’s now dive into a couple more science-explained and experience-proven business case studies.
A quite mischievous act of tricking customers into being happy occurred at the Houston airport. An increasing number of customers started complaining about the long waiting times they had to endure while getting their baggage after disembarking from their airline flights.
The first thing the airport management did was to try to shorten the time it takes for the baggage to get from the airplane to the baggage reclaim and so they hired more employees and made changes to the entire process. However, even though they managed to shrink the time to roughly eight minutes, which was way below the average, customers kept complaining. These changes had no impact on their perception of events.
The management decided to dig deeper and focus not on what’s happening with the baggage but rather on what the customers do after they step out of the plane until the moment they get their baggage. And here is the catch!
Out of those eight minutes, customers would only walk for about one and a half minutes and then wait for the remaining six and a half minutes.
This means that the customers just wanted to be occupied with something, even though they were not aware of it. The solution was super simple! The management moved the problematic flights to gates further away and so now, out of the eight minutes, customers spent seven minutes walking and only one minute waiting for the baggage. And guess what? Suddenly, the number of complaints dropped nearly to zero.
This case study stands as a beautiful example of how subjective customer satisfaction and experience are. At the end of the day, because of the change, customers were worse off, having to walk much longer. But their senses and minds were occupied, which was ultimately what made them satisfied, even though they didn’t know why.
Disney understands that for their park visitors’ to leave with good and happy memories, the focus doesn’t have to be put on their entire experience over several hours in the amusement park. Research shows that our memories are formed by exactly two aspects:
These two aspects mingled together are known as the peak-end rule. Disney understands that if they almost exclusively focus on the peak moment and the moment at the end, the overall experience will be good. However, if the entire experience is really good and Disney messes up the end of it, the memories won’t be as pleasant because customers exhibit a better memory for more intensely emotional events. If the end is bad or somehow bland, the visitor might think twice before coming back again.
Which of the two waters in the self-serve taps below is used most often by the customers? Would you pick the one with a fancier display? And why are there even two taps for water when it is just the same drink?
This is called The decoy effect. You’re supposed to choose the one with a fancier display. But mainly, you’re supposed to choose water instead of soda. The less fancy water display serves as a decoy, to make you want to drink the one from the fancy tap. And ultimately, to make water more attractive and appealing to you.
Let’s explore the decoy effect some more through our favorite business case still popular in Ikea to this day.
Ikea uses the decoy effect all the time. The motivation is simple: to sell more high-margin items. In their selection of product displays, they purposefully include items, which they don’t really intend to sell. They only include them so that the other, very similar but prettier and better quality looking ones, high-margin items look more attractive to the customers. A cheeky Ikea slogan comes to mind, which fits this situation perfectly: “We throw in extra parts just to mess with you.”
The picture demonstrates it quite well. You can exactly see which of the two drawers serves as a decoy and which Ikea wants you to buy. The one on the left side is smaller and not as fancy material-wise as the one on the right. Of course, Ikea knows very well that the one on the left won’t sell as good but by keeping it in their selection, it makes the one on the right look better. Again, Ikea created a context that delves deep into their customers’ subconscious to make the final decision and, in this way, generates more profits.
Let’s juice this topic up a little! An interesting study found that customers visiting supermarkets spent a disproportionate amount of time deciding on the brand of orange juice to buy. Why?
Because the selection was too big. In psychology, this type of behavior is called choice overload. If there are too many things to choose from, it often causes action paralysis and usually leaves us with no other choice than to walk away empty-handed or to choose the option we have experience with. None of these is favorable for the retailer. However, the morale of the story is not to shrink the selection. The point is to simplify the process for the customers by highlighting the choices you want them to buy and creating such a choice architecture in which the customers can choose with ease and without feeling overwhelmed.
Can you use insights from behavioral economics when working on product descriptions? Well, of course, you can! Here is one clever example of how.
Innovationbubble, a psychological insights and behavioral solutions consultancy, teamed up with one high-end fashion brand struggling with their online conversions. Based on this high-end fashion brand’s past collaborations with other marketing agencies, the brand thought they have sixteen different customer segments and that they need to cater to each, individually. However, Innovationbubble identified only three customer segments: confidence boosters, integrators, and social manipulators.
Confidence boosters shop the brand to build their own self-esteem on the fact that they now own a piece made by this brand. Integrators’ most basic need is to belong within their social group, so they are externally influenced to buy from the brand. Social manipulators use the brand as a tool for showing off how successful they are. Do you think these three segments have something in common? They do.
Each customer segment feared something different but fear was a common denominator in all three. Confidence boosters’ fear stemmed from not being good enough without owning products made by the brand, integrators feared rejection by their social group and social manipulators feared being mediocre and unnoticeable by the crowd. The brand, finally getting a full understanding of how the subconscious of their customers might be operating, changed product descriptions to only speak to these three segments. The result was an incredible 51% increase in conversion! And the beauty of this all is that the brand didn’t have to change their products or the price. They only had to change the communication.
By this time, your mind might be overflowing with ideas to hack the customer’s subconscious brain of your own. We’ll leave you to it with two important points you don’t want to miss: